Since January I have been building my dividend ETF positions, but with the year over halfway finished, I have decided to go back to individual stock purchases for the remainder of 2023 (July 1+). There are a couple of reasons, but the main being that I enjoy buying individual stocks way more than ETFs, the hunt excites me. That being said, I have a feeling that I’ll be going back and forth between some type of screen and ETFs for the rest of the time building this account.
In the past, I have started with dividend champions and dividend contenders varying the time I required a stock to pay a growing dividend (25 and 15+ respectively) and then applying a multi-factor screen which took some time. This time around, I am going to change it up a bit.
Who are the Dividend Kings?
The Dividend Kings are stocks that have increased their dividend for 50+ years. 50 years represents a lot of black swan and “unforeseen events.” Things like:
- Seven Recessions
- The endless amount of wars since early 2000
- Double digit interest rates in the 1980s to combat staflation
- Fall of communism, and the fall out thereafter. Not to mention when PIIGS were going to take down the entire world
- Terrorist attacks
- Dot Com bubble
- Global financial crises
- Zero/Low-Interest rates for a decade+
- A freaking global pandemic
…and I am missing probably 279 other events that were going to “make this time different”(global cooling and warming happened during this time frame). The point is that these companies kept increasing their payout to shareholders. The clear negative associated with this approach is that they are established, usually boring, businesses that do not have a clear pathway to hockey stick like growth.
At some point I am positive I’ll pivot again, but I don’t look at that point as a bad thing. I do not do this for a living so if something can come across my screen by changing it up from X to Y then that is a positive.
Easy Stock Screen
Next, I am going to apply a really, really easy stock screen using Sure Dividend’s daily updated Dividend King List.
- First, the stock has to have a P/E lower than 20
- Second, the payout ratio needs to be lower than 40%
- Third, the yield has to be higher than 3%
That’s it! and since it’ll take all of 5 mins I’ll run the screen every Monday or Tuesday before my first purchase that week. If nothing hits the screen I’ll use a lower amount than I have in the past to add to my ETF Position that I build up in the first 6 months of this year.